Key takeaways
- GM and Stellantis have laid off a collective 2,300 workers as a direct result of the UAW strikes
- Ford temporarily laid off factory workers last week
- All three stocks closed downwards on Thursday as a result
Looks like the dispute between the Chicago Three and the United Auto Workers (UAW) union is getting ugly. General Motors and Stellantis have laid off workers, which they say is a direct consequence of the strike after Ford temporarily laid off employees last week.
The gap between the UAW’s expectations and Ford, GM and Stellantis’ offers is pretty broad – which means the strike could escalate and turn into a months-long affair. As a result, the three car makers’ stocks are struggling to stay buoyant.
Here’s everything you need to know about the latest GM and Stellantis layoffs – and why the strike could drag on for months longer.
What’s happening with the GM and Stellantis layoffs?
The car industry strike is getting nasty. General Motors and Stellantis confirmed on Wednesday that they had laid off more workers thanks to the ongoing UAW negotiations.
GM has halted production at its assembly plant in Fairfax, Kansas, thanks to a “shortage of critical stampings”, which should have been supplied from its Missouri factory, where workers went on strike last week. Around 2,000 employees are thought to be affected.
As for Stellantis, the carmaker confirmed it was laying off 370 workers across three parts factories in Ohio and Indiana due to “storage constraints” related to the strike.
GM was pretty clear in its statement. “We have said repeatedly that nobody wins in a strike,” the company said. “What happened to our Fairfax team members is a clear and immediate demonstration of that fact. We will continue to bargain in good faith with the union to reach an agreement as quickly as possible.”
The strike is historic as it’s the first time all three companies have faced strike action at once. The UAW represents 146,000 workers overall. With just 13,000 on strike at the moment, the union has plenty of room to escalate with its new tactics before calling a national strike.
Have there been other strike-related layoffs?
The move comes after Ford issued temporary layoffs last week, where around 600 workers at Ford’s Michigan plant were told not to go to work on Friday due to their work being impacted by another striking department.
“Our production system is highly interconnected, which means the UAW’s targeted strike strategy will have knock-on effects for facilities that are not directly targeted for a work stoppage,” Ford said in a statement.
Usually, factory idles result in partial pay for workers. But Ford said there wouldn’t be any compensation for the temporarily laid-off workers due to the UAW strike.
UAW president Shawn Fein had some strong words about Ford and GM’s decisions. “Let’s be clear: if the Big Three decide to lay people off who aren’t on strike, that’s them trying to put the squeeze on our members to settle for less,” Fein said in a UAW post on X.
How are negotiations going?
So far, there’s a broad gap between expectations and reality for all parties. The UAW now wants a 36% wage raise, down from the 46% it asked at the beginning of negotiations, the return of guaranteed pensions and retiree health coverage, which all three car makers have resisted.
Stellantis has now submitted a fifth contract offer to the UAW, but union negotiators said the latest attempt lacked the job security guarantees workers are after. The latest Stellantis offer was also believed to have a close to the 19.5% pay rise already proposed.
Not everyone is as willing to find a truce. GM’s CEO, Mary Barra, said on Wednesday that the union’s demands were too costly, citing the company’s labor costs of $67 an hour compared to $45 for EV rival Tesla, which doesn’t have unionized workers. GM has said it’s offered the union $150,000 annually plus benefits, profit sharing and overtime.
The UAW has threatened to escalate its strike action if Ford, GM and Stellantis don’t make any “serious progress” by noon today. Fein will update UAW members on a Facebook Live stream before the deadline.
There’s at least one positive outcome from union negotiations – though not in the U.S. Unifor, the Canadian autoworkers’ union, reached an agreement with Ford and narrowly avoided a strike after an eleventh-hour deal was reached between the two on Tuesday. Unifor had asked for higher wages, improved pensions and worker support for the coming EV transition away from gas cars.
“When faced with the prospect of an all-out strike by 5,600 Unifor members at every single one of Ford’s facilities in Canada, the company made a significant offer to the union,” the union said in a statement.
Is anything else happening with the Chicago Three?
It seems like Ford is at the end of its tether. Across the pond, U.K. Prime Minister Rishi Sunak confirmed the country was pushing back its current target to ban new petrol and diesel car sales by 2030 – and Ford wasn’t happy, to say the least.
“The UK 2030 target is a vital catalyst to accelerate Ford into a cleaner future,” Ford UK chair Lisa Brankin said in a statement. “Our business needs three things from the UK government: ambition, commitment and consistency. A relaxation of 2030 would undermine all three.”
What that translates to? Money. One of the key sticking points with labor union negotiations has been the future role of EVs in the car industry. Net zero mandates have left traditional car makers like the Chicago Three overhauling their entire business model to account for the transition, spending billions of dollars in the process.
Ford has already invested $531 million in its UK EV facilities, with further investment planned based on the previous 2030 pipeline. But that pales in comparison with what car makers have spent in the U.S. Ford plans to spend $7 billion in the next few years to build brand-new battery plants, while GM has committed to spending a massive $35 billion from 2020 to 2025.
What’s the market reaction been like?
Ford closed 1.29% lower on Thursday, GM lost 1.48% and Stellantis stock fell 1.73%. GM and Ford saw a 1% decline in their stocks when the strike was confirmed a week ago, whereas Stellantis climbed 1%.
Both Ford and GM have shed around 15% of their share price value since the labor problems first began. Stellantis is faring better, having gained 11% in the same time period.
And there’s a further chance of the stocks falling should the strikes get dragged out by the UAW. The general consensus is that the car makers are in a rock and a hard place: Deutsche Bank previously estimated earnings could slip between $400 million and $500 million per week, assuming a national strike took place. But the contract proposals would add $80 billion each in labor costs for the Chicago Three.
The bottom line
The UAW and Chicago Three are stubbornly sticking to their guns. But the union has the advantage right now, with the potential to deploy a national strike – which could be devastating for Ford, GM and Stellantis.
With each company already feeling squeezed thanks to EV government mandates, it does imply this strike could play out differently from others in the past. As it stands, there’s no agreement – nor one coming in the near future.
Read the full article here
